India can ban, restrict or tax exports of rice and wheat at short notice, and when it does, signed contracts may become impossible or much more expensive to perform. Your contract should say clearly what happens if that occurs.
These rules have changed often. Before you agree any rice or wheat contract, check the current position with DGFT (Directorate General of Foreign Trade), which issues export policy notifications.
Past examples
Wheat exports were banned in May 2022. Non-basmati white rice exports were banned in July 2023, and those rules were later relaxed in 2024. These are past examples only and say nothing about the position today. For wheat specifically, see whether India allows wheat exports right now.
Measures can take different forms. A full ban, a ban on one grade only, a minimum export price, an export duty or an export allowed only through government channels. Each affects contracts in a different way.
What happens to contracts
- Goods not yet shipped may be blocked from export from the date of the notice.
- Notifications sometimes allow shipments already in process, for example where a letter of credit was opened or goods were handed to customs before a date. The exact conditions are set in each notice.
- A new duty or minimum price raises the seller's cost, and the seller may ask to renegotiate.
- Domestic prices can fall after a ban, tempting sellers to sell locally rather than wait.
- Advance payments become hard to recover if the contract simply cannot be performed.
Clauses to agree
Grain trade contract forms, such as those published by GAFTA, contain a prohibition clause that deals with export bans. Whatever form you use, agree the points below in writing before you pay anything. A lawyer familiar with your governing law should review them.
- Government action: what counts as a prohibition or restriction, and who must prove it.
- Partial shipments: what happens to goods already loaded or cleared.
- Extension period: how long the contract waits before it is cancelled.
- New duties or minimum prices: who pays, or whether either side can cancel.
- Advance refund: how and when any advance comes back.
- Notice: how quickly each side must inform the other.
Reducing the risk
How restrictions affect supply more broadly is covered in how government export bans affect supply.
- Check the current DGFT position on the exact product and grade before signing.
- Keep advances low on products with a history of restrictions.
- Ship in smaller, earlier lots rather than one large lot late in the year.
- Watch domestic price and stock news, which often comes before a restriction.
- Have a second origin or product ready if a ban would stop your production.
How we help
We follow DGFT notifications for the products we source and flag changes to you as soon as we see them. We also help you plan shipment timing and advance levels so less is at risk. Ask for a free sourcing review before you commit to a grain contract.